There is a lot of scrutiny regarding Robinhood's attempt to use SIPC to insure money in their proposed checking/savings account offering, which they are now rebranding as a cash management account. This seems to have struck a particular nerve for the "traditional" (non "fintech") folk.

But why? The argument that I keep reading is that SIPC is meant only to insure money "intended to buy securities" (see full quote and source below). But that seems entirely vague, to the point where I'm somewhat encouraged that Robinhood attempted to exploit the vagueness to pass on better rates to customers. I'm more inclined to be upset that someone else gets to decide what my "intent" is when I have money parked somewhere and, based on that decision, gets to dictate whether or not my money is insured.

Thoughts? Insights? Thanks!

Full quote and source:

"Brokerage cash management accounts are meant to hold cash until it can be invested in securities, and aren't intended strictly for savings, Harbeck said. Money sitting in such accounts but not intended to buy securities may not be covered by the SIPC, which insures accounts for up to $250,000 of cash in the case of a broker's failure."

https://www.cnbc.com/2018/12/20/senators-call-on-sec-and-other-financial-watchdogs-to-look-into-fintech-regulation-after-robinhood-debacle.html